The MOU signed by Nauru president Baron Waqa and Australian prime minister Kevin Rudd does not include an offer of citizenship. Photograph: Dave Hunt/AAPImage

A limited number of asylum seekers will be allowed to “settle and reside” in Nauru under the Australian government’s new settlement deal with the Pacific Island nation, but they will not be able to apply for citizenship.

The prime minister, Kevin Rudd, has clarified the terms of the memorandum of understanding (MOU) between the two countries after a Nauru government spokesperson was reported as saying permanent settlement was not an option for genuine refugees, directly contradicting Rudd’s statement on the weekend.

Rudd said the MOU drew on Nauru’s “tradition” which allowed people the option of settling there, even though there was no category for permanent residency.

“In the past, people have come to Nauru and ended up settling there for 20 years,” Rudd said.

Earlier in the day, the immigration minister, Tony Burke, confirmed he had spoken to the Nauru justice minister overnight and said there was no change in their position.

“As per the arrangement, people will have the opportunity to settle and reside in Nauru, but they will not become citizens.”

When the government announced the MOU, Rudd said under the arrangement, “it will now be possible for asylum seekers to not only be processed in Nauru, if they are found to be in need of protection, they could also be settled there.”

His comments came as another group of 39 asylum seekers was sent to PNG, bringing the total to 118 under the new agreement.

Burke reaffirmed that while Nauru is a signatory to the UN refugee convention, the country does not have an immigration category for permanent residency.

Burke said the Nauru agreement could not be compared to the government’s agreement with Papua New Guinea, which he described as going “well beyond” the requirements of the refugee convention because it gave the opportunity of full citizenship.

The offer of citizenship is not a requirement under the convention.

Burke signed the PNG Regional Resettlement Arrangement on Tuesday night.

On Monday night the speaker of the House of Representatives and Labor member for Chisholm, Anna Burke, was reported on the No Fibs website as questioning the government’s asylum seeker policies and the cuts to foreign aid at a community forum.

“Sometimes I even wonder why I run for the Labor party,” she said.

Burke’s office confirmed she made the “off the cuff” remark and pointed to her previous remarks regarding her reservations about the policies.

Deputy Liberal leader Julie Bishop told the ABC that she was not surprised that the Nauru arrangement was unravelling.

"I haven't seen any difference in his [Rudd's] political behaviour," she said.

"[Rudd's] still making grand announcements that unravel as soon as the lights and cameras move on, for example the announcement he made about Nauru.

"It's a misleading claim about the nature of the agreement he says he reached with that country."

The Nauru government is continuing to meet with community leaders to allay concerns over the agreement with Australia.